TODAY’S FAYRE – Sunday, 7th December 2014



The expense of spirit in a waste of shame

Is lust in action: and till action, lust

Is perjured, murderous, bloody, full of blame,

Savage, extreme, rude, cruel, not to trust;

Enjoyed no sooner but despised straight;

Past reason hunted; and no sooner had,

Past reason hated, as a swallowed bait,

On purpose laid to make the taker mad.

Mad in pursuit and in possession so;

Had, having, and in quest to have extreme;

A bliss in proof, and proved, a very woe;

Before, a joy proposed; behind a dream.    

All this the world well knows; yet none knows well    

To shun the heaven that leads men to this hell.”  



William Shakespeare – Playwright & poet – 1564-1616




Few would argue the toss that the Times’ chief cricket correspondent Michael Atherton was the doyen of his trade – in a league of his own in my humble opinion. He wrote the most sensitive and moving article on Australia’s lifeblood being given poignancy by the tragic death of Philip Hughes. There would have been many a ‘watered-eye’ on reading this brilliant piece.



However I would like to take issue on one observation he made in the article. Mr Atherton refers to the perception that cricket’s popularity at grass-root level having declined here in Old Blighty as a social engagement, as a result of a long-term post Thatcher aftershock. I would put it down to social mobility resulting in a much wider choice of entertainment and pastimes. For the majority cricket today takes up far too much time. Life is frenetic, with everyone seemingly being ‘flat to the boards!’ I have no idea what ‘Athers’s’ politics are and I care even less, but the declining popularity of community cricket has ‘now’t’ to do with the Thatcher era! I, myself, played club cricket every Saturday and Sunday for 20 years and if I had me time again, I would do exactly the same.



With the exception of the NIKKEI, which rallied by 2.64% on the back of frothy synthetic and hollow economic stimulus plans promised but yet to be delivered by Abenomics plus further progress made by the Shanghai Composite, most global indices only moved relatively modestly last week, which was surprising, considering some of the international news was momentous. Also as we head towards the end of the year, equity geeks normally expect evidence of a ‘Santa Rally.’

The S&P 500 rose by 0.50%, the FTSE by 0.30%, European bourses by an average of 0.90%. The US economy seems as though it has come under a wet sail. Consumer Confidence seems positive if Thanksgiving & Black Friday sales are anything to go by. So was manufacturing output. However Friday’s Non-farm payrolls – +321k for November and the 10th successive moth that over 200k jobs have been created in a month – proved to be a blockbuster set of numbers, even though unemployment did not come down below 5.8%. However wages have only risen from 2% on an annualised basis to 2.1%. This is probably a major contributing factor to why there is no pressure to raise interest rates in the US before the spring of next year. It is interesting to note that the S&P 500 has rallied by 12% so far this year, whilst the FTSE has just been treading water.

As for the EU, there is little to shout from the roof tops about, though Germany kept some modicum of poise with industrial output last month, despite major sanctions/reprisal issues with Russia. When ECB President Mario Draghi announced some more promise of help, but nowhere near the much-needed introduction of full-blown QE, the chattering classes just sniggered. January is still being bandied around as the month QE will be adopted, but I shall not be holding my breath, not whilst Chancellor Merkel remains omnipotent. Merkel just cannot spell QE or debt.


Despite reassurances from Chancellor Osborne that growth was greater in the UK at 3% for 2014 than anywhere else in the Western world, he was still forced to ask the electorate to swallow an even bigger dose of austerity than was requested of it in 2010 with a view to cutting the budget deficit by 2019. If we are to believe that Health, Pensions and International Development are ‘ring fenced’ from cuts, the government will be forced to make as much as 40% cuts in virtually all its departments. Ed Balls squealed like an ally cat at the prospect and certainly much of the media was delighted to come out in support of his exhortations. Osborne’s fiscal cuts are achievable if the political will is there. There is little sign of any appetite for further austerity. Frankly, Britain, living within its means, is an anathema to Labour. Socialism is a culture whereby other people’s money is gloriously and wantonly wasted in an irresponsible profligate manner.

The problem this country has now, going forward, is that come next May, the UK is looking ungovernable and that is bad for business confidence and investment. DPM Clegg and his Lib-Dem mavericks have virtually terminated the coalition. Clegg failed to turn up in the House for the ‘Autumn Statement’ – discourteous in the extreme – and Cable was openly critical of government policy and Alexander, after a spat with the BIS secretary, has also started to express his dissent. The Stamp Duty initiative will clearly put a dampener on the movement of houses valued above £2 million. Berkeley Homes expressed their concerns. However shares in Persimmon, Bovis and Redrow initially did well.

After the previous week’s OPEC meeting, oil has come down sharply to circa £68 for Nymex and $70 for Brent Crude. President Putin’s timely address to the Russian people attempted to put the fear of God in to Western democracies. Putin, whilst cynically threatening to make life very difficult with sanctions on the supply of oil and gas, in the same breath declared that Russia was open for business. The Rouble, despite a rally on Friday is still 56% down against the Euro in the last year and 38% against the Greenback in the last 6 months. Many believe that Russia’s huge gold reserves could prove a very effective tool to support its flagging currency, if sanctions start to bite uncomfortably.




Terms were finally agreed in principle for Aviva to acquire Friends Life for £5.6 billion. The drop in oil prices have given the likes of BP, Tullow and Royal Dutch Shell something to think about. BP is giving full consideration to cutting jobs in middle management with oil prices at these levels. Without good housekeeping it will be difficult to maintain dividends. On the other side of the coin with Shell now yielding nearly 5%, these shares over a 2 year period could prove very attractive. Though Primark’s sales have risen 10% on a year on year basis to September, this level of activity is unlikely to be maintained. This is a worrying trend. ABF shares have fallen 5% in recent weeks. The Sunday Telegraph tells us that Crystal Amber is looking to build a stake in Sainsbury. I hope they are patient if it intends to attempt to mount a takeover. Will Qatar be happy? Kingfisher’s Sir Ian Cheshire believes that supermarkets will be under the cosh for some years to come.





ECONOMICS – Monday – JAPAN GDP EST -0.5%, Tuesday – UK BRC, UK INDUSTRIAL PRODUCTION +1.8%, Wednesday – UK TRADE DEFICIT Est £9.6 billion, Thursday – EU CPI Est 0.6% Y/O/Y, US RETAIL SALES +0.3%, Friday – US PPI Est 1.6%, US MICHIGAN CONSUMER CONFIDENCE from 88.8 to 89.1.










David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom



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